Bozeman Montana Real Estate Information Archive

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For those still wondering if buyer confidence has returned to the United States Housing Market, they will be relieved when they read the new survey for released by Bankrate. According to their survey, real estate now ranks as the number one investment choice for Americans.

The company asked people how they would choose to invest their money if they had extra cash lying around. Twenty seven percent of Americans chose some form of property investment – the highest ranked answer of all other options. With signs of a normalizing real estate market, buyers are feeling confident that once again, real estate will turn in some high returns.

Buyer confidence has been climbing steadily in the last years. However, most articles discussing buyer confidence compared real estate confidence to previous years. This survey shows that confidence in real estate has now reached a point that it is also starting to compete (and beat!) other industries.

CDs and other cash investments, last year’s top answer, came in second at 23 percent. Seventeen percent of Americans would put their money in the stock market, 14% chose gold and other precious metals, and 5% chose investing in the bond market.

Coupled with low mortgage rates, high rental rates and low vacancy rates, its easy to see why an investor can see a lot of potential in real estate based investments.

Americans living in the West (35%) and urban (31%) areas showed the highest preference towards making a real estate based investment.

The South preferred real estate and cash investments. The Midwest preferred cash and stocks over real estate.

I read an interesting article today on new construction for July. More and more people are putting their faith in the housing market. Here’s what I took out of it.

New home construction continued to rise in July which should continue to boost the economy in the coming months. Housing start ups climbed 16% last month to an annual rate of 1.093 million units, showing a renewed faith in the housing market. July levels hit the highest level of construction since November. Construction on new apartments has seen the greatest increase in the US. Total home construction rose 22% all the way up through July, and building permit applications.

“Her work at Treasury has not only helped servicers and investors adopt HAFA short sales, but also led to new guidelines that include making deficiency releases and relocation money standard when it comes to these transactions. Maggiano and her team were also responsible for programs that have helped so many people across the country avoid foreclosure.”

The changes Maggiano will affect the tools provided to agents and consumers if they get bogged down in the midst of their short-sale process by:

PRICE IS RIGHT- Single-family home prices are at a decade low with their median reaching $154,600 in January! During the house market’s peak, this same figure was $230,900.

BUYING V. RENTING BALANCE– As many of my blogs have been emphasizing, the balance that is ever shifting between home-ownership and renting is firmly on the side of home-ownership. Rents are on a sharp rise and home affordability is as well. Two trends that make a big statement.

INVENTORIES– Inventories are shrinking. “When excess supply dries up, people start building more new houses, which has the virtuous effect of reducing the unemployment rate and increasing the economy generally,” according to a USA Today article.

MORTGAGE RATES– The average 30-year fixed rate mortgage (most popular choice for hoem buyers) is 3.59% just above the all time record setting rate of 3.49% that was recorded in July.

“It’s hard to argue against buying a house now, assuming you can get a loan,” writes John Waggoner, a columnist with USA Today. Sure, Waggoner says that getting a credit check for approval of a mortgage can be a “only slightly less intrusive than a CIA background check,” but for those who are able to qualify, a lot of analysts say that now can be a good time to purchase a home.

Yeah yeah, we have all heard the pros of buying a home versus renting, but when it comes down to it; do consumers act upon all that advice? Yes.

A new study has shown that in more than 75% of metro areas in the US, home owners would start saving money after only three years of home ownership as compared to renting. This figure includes down payments, closing costs, mortgage payments, property taxes, utilities, and even maintenance costs. Three years is just the average. In Miami, the turn-over to benefit only takes 1.6 years where as in California the same figure is 8.3!

"Historic levels of affordability make buying a home a better decision than ever, especially considering rents have risen more than 5 percent over the past year," says Stan Humphries, Zillow’s chief economist.

Trending News, Apartment Rents Rising! What does this mean for the Real Estate World?

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Apartment rents in the U.S. climbed the most in almost five years in the second quarter as shrinking vacancies allowed landlords to charge more, Reis Inc. (REIS)said. This is positive news for the markets that have been struggling.

Supply Side: For the past year, new construction has been ‘quite weak by historical standards.’ But construction of both rental units and new home building are now seeing an upturn. It is estimated that next year, 150,000-200,000 new units will be completed in 79 metropolitan markets. Confidence in new construction is rising!

Demand Side: Demand for rentals jumped during the real estate slump due to insufficient income, bad credit, and lack of confidence in real estate. The national apartment vacancy rate fell to 4.7% in the second quarter, the lowest since 2001. Confidence in real estate is rising!

Before listing them all, I just want to comment on the importance of precedent. What you do in your life, financially and professionally, matters. Try to strive to improve in the areas you know you falter in.

Loan Approval Precedent

Disapproval of past loans stay on your history and will weigh into the decision of future loans. This does not mean if you were denied you will be again, but in the complex picture, it will play a role.

Lack of Full Documentation

Required documents are just that… required. The lender has a huge choice in their hands and little errors like forgetting documents will raise doubts about the honesty of the paperwork. Be transparent and fully disclose all needed documents.

Credit Score

One of the most important numerical decision factors is your credit score. Again, this number establishes precedent. How you have handled your monetary responsibilities in the past is a strong indication of how you will handle them in the future.

Employment History

Monthly income is used to evaluate your fiscal ability. Frequently shifting jobs, demotions, or a high incidence of being fired will paint the picture of an unstable candidate.

Income:Purchase:Saving Ratio

We all have a baseline income. Where that money goes has a steady pattern. Expenditures and rate of saving develop a portfolio on what you prioritize. One common mistake made by those applying for a loan is the purchase of a large dollar item after applying for the loan. This instantly reduces you ability to quickly pay back the loan and to the lenders, the risk may seem too high.

Dream Home

The listing you pick to be your home is evaluated just as the applicant is. The house must be legal by all standards for the investment to even be considered.

Avoid the possible mistakes and try to find solutions for the issues that might lead to disapproval. Devote good amount of time and take professional help to prepare your home loan application.

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406.570.5730-call me, Real Estate Professional Tim Hart, if you have more questions or need assistance in purchasing a home.

Real Estate always has its challenges. When it is doing poorly, buyers are struggling to finance their dream. When news turns positive, like in today’s market, when even with the market getting healthier by the day, the challenge is now high competition. A shortage of good homes in a market that is primed for buyers leads to intense multiple off situations in nearly every transaction.

“Would-be buyers are packing open houses and scrambling to make offers on properties before they are even listed. Bidding wars are erupting. And real estate agents are vying fiercely to represent the few sellers that do exist. Housing inventory has sunk to levels not seen since the bubble years. The number of American homes with a "for sale" sign hit 2.5 million in April, the lowest number for an April since 2006, according to the National Assn. of Realtors.”

The sharp drop in inventory paired with the record low interest rates have proved to be effective in stabilizing some of the hardest hit markets in the US (Southland, Vegas, Phoenix, and Miami). Furthermore, the dreaded wave of foreclosures that was predicted to hit the market with a sucker punch has not yet come and with fewer and fewer borrowers entering default, it is starting to look like it may never materialize.

So on this Friday, exactly halfway through the year, remind yourself even as you struggle through highly stressful and competitive offers, this is a problem of a healthier market compared to where we sat last year.

Recent price increases with bank-owned homes are helping to provide an overall boost to the housing market, a recent report from Clear Capital says.

Prices of REOs nationally rose 8.1 percent over year-ago levels on a median price-per-square-foot basis, according to Clear Capital’s May housing data.

“Strength in the REO-only price trends as well as some early indications of price gains spreading from low-tier sectors to the mid- and higher-priced homes is helping confirm that the country continues to make progress on its recovery,” says Alex Villacorta, director of research and analytics at Clear Capital. “We are expecting to see improvements extend over the next several months.”

Clear Capital also reported quarterly increases to overall prices, rising 0.4 percent for the quarter, the first quarterly gain posted since November 2011. The West saw the most growth in prices, rising 2.7 percent, followed by the South, with a 1.2 percent quarter-over-quarter gain, according to the report.

Trends of the real estate market have shifted from “seller’s market” to a “buyer’s market” and with those shifts have come dramatic change in pricing. When foreclosures anchored the prices of homes at lowered prices, buyers began to view overall value of the average house to be lower. With that mindset, buyers are low-balling offers and the offers are coming in at a higher frequency.

Inventory of homes are all an all time six-year slump. Low supply mixed with a heightened demand due to employment rates rising means buyers feel overly confident and eager when they enter the market.